Lead

[winston]

China lead prices rise 40 pct as supply falls

By Polly Yam

HONG KONG, Jan 6 (Reuters) - Chinese prices of spot lead, used in batteries, have risen 40 percent in the past month, buoyed by reduced supply and stronger winter demand for automobile batteries, industry officials and traders said on Tuesday.

The rise in China, which consumes a third of the world's lead, exceeded a 16 percent rise the same month on the London Metal Exchange

It marks a turnaround after Chinese prices lost nearly half their value between last September and early December on reduced demand triggered by the global financial crisis that spurred Chinese lead smelters to cut production.

"Many small smelters have shut down," said a sales manager at Yuguang Gold and Lead (600531.SS), the country's top producer of lead. "And battery makers are buying more lead."

Battery makers had cut lead purchases in the fourth quarter of last year because of volatile prices and had used up their stocks of the metal, he added.

"Demand for batteries is improving," said a purchasing manager at a large battery manufacturing plant in Hubei province that consumed about 140,000 tonnes of lead last year.

He said many car owners in China fixed their vehicles and changed batteries before the Lunar New Year, boosting battery consumption ahead of the festival, which falls on Jan. 26 this year.

Spot lead traded at about 12,000 yuan ($1,757) per tonne in Shanghai on Tuesday, up from 8,600 yuan on Dec. 5 but down from 17,600 yuan in mid-September last year.

But battery demand may wane and the price may fall after the Chinese New Year as car sales fall, amid the weaker domestic economy, the manager said.

Passenger car sales in China fell 10.3 percent on the year in November, the third monthly fall last year and setting the stage for a possible double-digit decline in 2009. [ID:nSHA314290]

"The winter is always a good time for lead. This year, the main issue is lower supply," a lead trader in Shanghai said.

Xinling Refining in Lingbao city in Henan province shut its sole 100,000-tonne-a-year lead plant in early December because of low prices, a company director said.

"Another two smelters of the same size like us in the city closed a month earlier than us," he said, adding the firm would not resume production until mid-February because of tight supplies of concentrate.

Smelter officials said supply of lead concentrate had fallen as mines in northern provinces closed operations in the winter.

In the southwestern China's Yunnan province, small lead mines have also cut production on safety checks by local authorities.
The Yunnan government plans to support local lead smelters by offering to buy up to 150,000 tonnes of lead it will use to collateralise bank loans this year. [ID:nHKG337272]

The plan is expected to hold up lead stocks for a year and to cut supply to the spot market in China.

Chihong Zinc (600497.SS), which produced about 90,000 tonnes of lead last year and has been invited to sell the metal to the Yunnan government under the plan, has not decided whether it will participate, a company official said.

"We were verbally told about the plan but have not received a document," she said.

She added Chihong would not hold up any metal for the Yunnan government's buying plan before it made the decision.

Source: Reuters

[winston]

THE MOST BASIC FORM OF INSURANCE IS SOARING IN PRICE

by Brian Hunt

Joke in the DailyWealth office: "If things in America get really bad, as bad as the most negative analyst imagines, I'd rather own lead than gold. A gun will do you better in a crisis than money."

In the past few years, there's been a growing interest in "survivalist" thinking... like stocking up on gold, water, and canned food.

Our joke goes, if things turn into a "Mad Max" situation, a gun and some bullets will do you better than gold.

Actually, the production of batteries consumes far more lead than making bullets. This makes lead highly sensitive to global economic health, just like Dr. Copper.

And as we've showed over the past several months, "It's amazing what several trillion dollars will do to goose an economy."

To stave off a severe recession, the world's governments are making credit and money available through every crazy program they can think of.

This has spurred huge rallies in stocks, bonds, and commodities. China is also known to be stockpiling raw materials in an effort to plan for the future.

All this buying and money printing has produced a huge rally in LD, a fund that provides investors with a "one-click" way to own lead.

It has climbed 100% since March... and 44% since July. Buying survival insurance is getting expensive!

Source: Daily Wealth

[winston]

DJ MARKET TALK:China To Turn Net Lead Importer Year-End -Barclays

0403 GMT [Dow Jones] Barclays expects China to turn into net importer of lead toward year-end as domestic stockpiles are worn down; tips Chinese balance to go into deficit in 2Q10, "should provide good support for lead prices" in 2H10.

Bank expects Chinese demand to grow about 13-15% this year, boosted by strong auto, e-bikes sales amid government incentive programs, continued economic growth.

Expects Chinese refined output growth to slow from 2009's unsustainably high levels as scrap stockpiles built up in 2008 are worn down. Estimates provincial government lead stockpiling at about 150,000-200,000 tons in 2009, but notes these stockpiles would be released into market gradually to minimize price impact.

Says Chinese March trade data lead house to believe destocking has already begun; says estimates 7% on-year decline in domestic consumption, but notes March net exports increased, may reflect some running down of domestic stocks, given recent strong macroeconomic data, monthly record high auto sales in March. China makes up over 40% of both global lead consumption, production.

Source: Dow Jones Newswire

[winston]

China's 150 Million Electric Bicycles Bolstering Lead Demand: Commodities

The global glut in lead is falling to a five-year low as China, the biggest buyer, consumes a record amount to make batteries for everything from cars to emergency lighting to electric bicycles.

The supply surplus will drop to 8,000 metric tons in 2012 from 78,000 tons this year as China, which accounts for about 44 percent of global demand, uses 9.5 percent more, Morgan Stanley estimates.

Prices may rise as much as 19 percent to $2,500 a ton next year, according to the median estimate of 18 producers, analysts and traders surveyed by Bloomberg.

While lead slumped 18 percent this year amid mounting investor concern that slower economic growth will sap the use of raw materials, analysts and traders say prices will rally because consumption is expanding.

Demand will advance for a 10th consecutive year in 2012, and for at least four more years after that, Morgan Stanley predicts.

About 80 percent of lead is used in batteries, according to the International Lead and Zinc Study Group in Lisbon. Production in China, the biggest exporter, may rise about 20 percent in 2012, according to the Beijing-based China Battery Industry Association, which represents more than 700 producers. That will use a total of about 3.3 million tons of lead.

Global supply of refined lead will advance 3.8 percent to 10.22 million tons next year, compared with a 4.6 percent gain in consumption, Morgan Stanley estimates. Global production is valued at almost $25 billion based on this year's average price.

While the surplus is shrinking, stockpiles in warehouses monitored by the London Metal Exchange rose 73 percent since the start of January, reaching a record 388,500 tons on Oct. 14, bourse data show. That's equal to about two weeks of demand.

The picture seems to be moving from one of physical surplus to one of physical scarcity,” said Nic Brown, head of commodities research at Natixis Commodity Markets Ltd. in London.

What has been a picture of very strong supply growth in recent years may be beginning to tail off.

http://www.bloomberg.com/news/2011-12-1 ... ities.html

[winston]

Lead Stockpiles in China Seen Falling as Demand Growth Picks Up

Lead stockpiles held in so-called commercial warehouses in China, the world’s largest user, have dropped to the lowest level in more than two years, as battery makers expand output, boosting demand growth for the metal

http://www.bloomberg.com/news/2012-08-2 ... ks-up.html

[winston]

Zinc, the Metal Investors Love This Year, Has an Ugly Sister

by Agnieszka De Sousa

Zinc has jumped 38% this year while lead rose just 2.3%
Amid mine closures, lead supply coming from more recycling

Source: Bloomberg

http://www.bloomberg.com/news/articles/ ... gly-sister

[winston]

Chart of the day: Nothing leaden about lead’s future

by Nicole Elliott

Early this year, many analysts had written off the chance of huge price rises for base metals because of a slowing economy in China.

Ironically, many have done rather well, with lead futures on the Shanghai Futures Exchange powering towards December’s record high of 23,200 yuan (US$3,529) per tonne.

Volumes this year have been significantly higher than before and open interest has picked up since June.

Though overbought, we feel further sharp gains are still possible because momentum is almost as bullish as in November last year.

This is also backed by the fact that the lagging line has been given a boost again by the candles of 26 days ago.

Source: SCMP

http://www.scmp.com/business/commoditie ... ads-future

[winston]

Chart of the day: Lead takes it slow and gentle

by Nicole Elliott

The four sharp weekly falls following China’s National Day holiday were not what we had expected.

Subsequent price action is seen as a slow, gentle rounded base, which formed just ahead of Fibonacci 61 per cent retracement support and the top of the weekly Ichimoku cloud.

Though moving averages are bearish, the lagging line has rallied from the top of the cloud 26 weeks ago.

A sustained break above the 38 per cent retracement level at 19,454 yuan (US$2,940) per tonne completes an interim base and should see bullish momentum increase.

It will also put prices clearly back inside the upper half of the large symmetrical triangle of the past 12 months. Expect a rally to roughly 21,650 yuan.

Source: SCMP

http://www.scmp.com/business/markets/ar ... and-gentle